TY - GEN
T1 - Exchange Rate Exposure and Usage of Foreign Currency Derivatives by Indian Nonfinancial Firms
AU - Prasad, Krishna
AU - Suprabha, K. R.
N1 - Publisher Copyright:
© 2018, Springer International Publishing AG.
PY - 2018
Y1 - 2018
N2 - This paper investigates the usage of currency derivatives and its impact on the exchange rate exposure. A sample of 387 nonfinancial Indian firms listed in the National Stock Exchange of India were studied for a period of 5 years from 2011–2012 to 2015–2016. The currency derivatives data was collected from the annual reports of the sample firms, and the stock price data was collected from Ace Equity and Centre for Monitoring Indian Economy (CMIE) database Prowess. The results of the study indicate that the currency forward contract is the most preferred hedging instrument among the sample firms. The Indian firms showed the lower interest in exchange-traded instruments especially currency futures. This is in spite of the growth in the third-generation innovative and low-cost derivative instruments. This study also provided evidence that hedging using currency derivatives decreased the firms’ foreign exchange exposure level, while the use of foreign currency borrowing was found insignificant in decreasing the firm’s level of currency exposure.
AB - This paper investigates the usage of currency derivatives and its impact on the exchange rate exposure. A sample of 387 nonfinancial Indian firms listed in the National Stock Exchange of India were studied for a period of 5 years from 2011–2012 to 2015–2016. The currency derivatives data was collected from the annual reports of the sample firms, and the stock price data was collected from Ace Equity and Centre for Monitoring Indian Economy (CMIE) database Prowess. The results of the study indicate that the currency forward contract is the most preferred hedging instrument among the sample firms. The Indian firms showed the lower interest in exchange-traded instruments especially currency futures. This is in spite of the growth in the third-generation innovative and low-cost derivative instruments. This study also provided evidence that hedging using currency derivatives decreased the firms’ foreign exchange exposure level, while the use of foreign currency borrowing was found insignificant in decreasing the firm’s level of currency exposure.
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U2 - 10.1007/978-3-319-68762-9_8
DO - 10.1007/978-3-319-68762-9_8
M3 - Conference contribution
AN - SCOPUS:85113138944
SN - 9783319687612
T3 - Springer Proceedings in Business and Economics
SP - 71
EP - 80
BT - The Impact of Globalization on International Finance and Accounting - 18th Annual Conference on Finance and Accounting, ACFA 2017
A2 - Procházka, David
PB - Springer Science and Business Media B.V.
T2 - 18th Annual Conference on Finance and Accounting, ACFA 2017
Y2 - 26 May 2017 through 26 May 2017
ER -